On deficits, declare victory and go home

It didn’t generate much attention yesterday, but something rather amazing happened to the finances of the United States.

The Treasury Department announced Monday that it would reduce its level of debt in financial markets for the first time since President Obama took office.

The department said it expects to pay down a net of $35 billion in its marketable debt for the second quarter of 2013, the first time it has done so since 2007. […]

[T]hanks to unexpectedly higher receipts of government revenue and lower outlays in spending, the Treasury is experiencing a swing in fortune that allows officials to actually pay down some of its outstanding debt.

As a practical matter, this is one of the reasons the nation probably won’t have to raise its debt ceiling until October, which is good news. Congressional Republicans are suggesting they’re prepared to once again hold the country hostage, threatening to hurt Americans on purpose unless they get their way, so the more the crisis is delayed, the better.

But even putting that aside, yesterday’s Treasury announcement is amazing in its own right. At a basic level, a federal budget deficit refers to instances in which the government spends more than it takes in. When that happens, it’s up to the Treasury Department to borrow to make up the difference.

This quarter, however, the government will take in more than it spends, thanks in large part to increased taxes on the wealthy approved in January. Instead of borrowing more this quarter, the Obama administration will be able to pay down $35 billion in debt – the first such payment in the U.S. since 2007.

To be sure, it’s just one quarter, and the annual deficit isn’t close to vanishing, but the fact that the Treasury is able reduce its debt level at all – a development Ezra Klein described as “a shocking sight” – tells us something important about the nation’s fiscal challenges. Namely, we don’t have to worry about the deficit right now.

Washington has been stuck in the wrong conversation for so long, the political establishment no longer even realizes the “problem” they’ve emphasized has largely been solved. Instead of yet another protracted debate over which party is offering the more responsible approach to deficit reduction, I’d suggest pausing, looking around, smelling the roses, and appreciating the painfully obvious fact that deficit reduction has already been accomplished.

Officials can declare victory and go home. There’s no need for more austerity; there’s no point in another debt-ceiling crisis; there’s no rationale for slashing public investments. While Washington wasn’t looking, the deficit was cut in half, we’re seeing the fastest deficit reduction since WWII, the Reinhart/Rogoff study has been debunked, and we’ve reached the point at which the Treasury can even stop borrowing money (at least temporarily) and start paying down the debt a little.

So, for the love of all that is good in the world, can we stop talking about deficit reduction and focus on job creation?